Take your lumps. (Editor's Note).

Every July, executives around the world face a tough call: Will revenue meet budget for the second half, or is it time to cut? In 2002, Latin America's managers didn't wait for mid-year. They took their lumps early.

That's what we found in our exclusive annual survey of the world's leading financial experts, the LATIN TRADE Consensus Forecast of sales and profits for the top 100 companies in Latin America, This year's outlook finds that three quarters of the region's 100 largest publicly traded companies will post flat sales again in 2002. Profits, however, will rise 12%- thanks to cost reductions.

The LATIN TRADE Consensus Forecast shows that most managers have already taken a bitter pill to please creditors or to preserve profitability. Deeply indebted Mexican companies, like glass-maker Vitro and conglomerate Desc, have accepted slow or no sales growth. But they are also looking for rapid profit expansion through cost cutting.

Now slim and trim with little debt, they are on the prowl for acquisition opportunities in sectors and countries where no amount of cutting will keep companies profitable: telecom and Argentina. Flush with cash, America Movil and Telefonos de Mexico-both part of Mexican billionaire Carlos Slim's empire-are expected to scoop up ailing phone companies across Latin America in 2002.

Televisa would love to join the takeover club, but broadcast giant Univision remains beyond its financial reach. Instead, Televisa CEO Emilio Azcarraga is squeezing higher returns from programming successes in the red-hot U.S. Hispanic market.

Azcairraga may resent playing second fiddle to the U.S. distributor of his products, but the young Mexican CEO likely will find that guaranteed profit growth is better than taking big risks associated with buying improved sales numbers.

Indeed, most top managers in Latin America are not betting the farm on buyouts. Instead, they are whacking away at costs. Even if sales fizzle, profits will return.

Mike Zeliner

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